Arvest Bank today released its Skyline Reports on commercial and multifamily real estate in Northwest Arkansas for the last six months of 2016.

In the commercial real estate market, 1,005,502 square feet of commercial space were absorbed in Northwest Arkansas during the second half of the year, while 541,561 square feet of new space were added, resulting in a net positive absorption of 463,941 square feet. The vacancy rate for all commercial space fell from 12.7 percent in the first half of 2016 to 11.7 percent in the second half. During the first half of 2016, the commercial market experienced net positive absorption of 11,847 square feet.

The retail submarket has seen a slight increase in vacancy rates from 9.2 percent in the first half of 2016 to 9.4 percent in the second half of 2016, while the warehouse submarket has seen a more significant decrease in vacancy rates year-over-year from 11.5 percent in the second half of 2015 to 8.1 percent in the second half of 2016. According to Kathy Deck, lead researcher for the Skyline Report and director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville, this trend is likely a result of the changing shopping preferences of consumers.

“As consumers have increasingly embraced online shopping, it stands to reason that these new shopping preferences will have an impact on different types of commercial real estate with the retail real estate market softening while the warehouse market begins to tighten. I think that is what we are likely witnessing here in Northwest Arkansas,” said Deck.

The office submarket continues to show strength. While 155,933 new square feet were added in the second half of 2016, 271,396 square feet were absorbed – a net positive absorption of 115,463 square feet.

From July 1 to Dec. 31, 2016, there were $137.2 million in commercial building permits issued in Northwest Arkansas, a decrease from the $206.5 million in commercial building permits issued in the first half of the year and a slight increase from the $112.8 million in issued in the last half of 2015.

“Overall, the commercial real estate market can be described as both very active and well-balanced at this time,” Deck continued.

Vacancy rates in multifamily real estate rose slightly from the first half of the year but remain at low levels throughout Northwest Arkansas. The overall vacancy rate for the Northwest Arkansas multifamily market during the second half of 2016 was 3.2 percent, up from 2.4 percent in the first half of the year. The Skyline Report tracks 336,159 multifamily units in 735 multifamily properties across Northwest Arkansas.

Craig Rivaldo, president with Arvest Bank of Benton County, said about the Skyline results, “We are visiting with a large number of clients who have been very encouraged regarding the real estate development market here in Northwest Arkansas. They have been seeing and hearing what this report indicates – that the market is well balanced, and there are plenty of good opportunities for intelligent commercial and multifamily projects now and in the future.”

Springdale continues to have the lowest vacancy rate in the region, now falling below 1.0 percent to 0.9 percent followed by Bentonville at 1.3 percent, Siloam Springs at 1.8 percent, Rogers at 2.7 percent and Fayetteville at 4.7 percent. Fayetteville’s vacancy rate of 4.7 percent was up from 3.6 percent in the first half of 2016, the result, according to Deck, of a substantial number of “by-the-bed” rental units targeted to college students coming onto the market after the start of the Fall school semester.

Increased demand put upward pressure on lease rates with the average monthly lease price for a multifamily property unit in Northwest Arkansas increasing to $627.04 from $608.88 in the first half of 2016.

“We are running out of adjectives to describe the multifamily market in Northwest Arkansas,” Deck said. “Considering that what is generally considered the normal vacancy rate in multifamily properties is 5 percent, for the overall rate in Northwest Arkansas to be in the 3 percent range and to have stayed under 4 percent since the second half of 2014 is remarkable. With so many new multifamily properties under construction or recently announced, we anticipate that we will likely be in the more normal range of 5 percent within 18- to 24-months. And with so many of the newer properties having a more robust set of amenities, it won’t be surprising if we see higher average rates at that time, even with a higher overall vacancy rate.”

The Arvest Skyline Report is a biannual analysis of the latest commercial, single-family residential and multi-family residential property markets in Benton and Washington counties. The report is sponsored by Arvest Bank and conducted by the Center for Business and Economic Research (CBER) in the Sam. M. Walton College of Business at the University of Arkansas.

In 2004, Arvest Bank entered into a contract with CBER to collect information about the local real estate markets. CBER researchers aggregated and analyzed data from local governments, property managers, visual inspections and the business media to provide a complete picture of the status of property markets in the two counties.

The CBER provides excellence in applied economic and business research to federal, state and local government, as well as to businesses currently operating or those that desire to operate in the state of Arkansas. The center further works to improve the economic opportunities of all Arkansans by conducting policy research in the public interest.

FAYETTEVILLE, Ark. – Arvest Bank today released the residential real estate market Skyline Report results for the second half of 2016 in Northwest Arkansas. The report noted an almost equal increase in building permits issued, with a 37.0 percent increase over the same period in 2015, and new homes being occupied showing a 37.6 percent increase.

Significant absorption of new homes led to the lowest level of remaining months of unbuilt lot inventory, 35.1 months, since the inception of the Skyline Report in 2004.

“Given the increase in building permits we’ve seen during the past twelve months, it is quite impressive that the absorption of newly constructed homes has kept pace,” said Kathy Deck, lead researcher for the Skyline Report at the Center for Business and Economic Research at the Sam M. Walton College of Business, University of Arkansas at Fayetteville. “Overall the residential real estate market is as hot as we’ve seen it since the recession. Moving forward we will be paying attention to two issues that could slow down the pace of absorption – the forecasts for slower job growth in the area and the price of lots that are remaining, as this could limit builders’ ability to build the price of homes that are selling.”

There were 1,561 building permits issued in Benton and Washington counties in the first six months of 2016 and 1,574 new homes sold in the last six months of the year indicating good balance between the number of new homes being constructed and the number of new homes being purchased. In the second half of the year there were 1,638 permits issued, a 37.0 percent increase from the 1,196 permits issued during the same period of 2015.

The average sale price of homes sold during the period increased 7.4 percent from the same period in 2015 in Benton County, from $206,575 to $221,944. In Washington County, it increased 6.7 percent, from $189,093 to $201,804.

Centerton, in Benton County, has emerged as a hotbed of building activity. The number of building permits issued in Centerton from July through December was 208 – a 49.9 percent increase year-over-year and the third highest total of all cities in Northwest Arkansas. On the same note, there were 288 houses sold in the city during the period, a 46.9 percent increase over the same period in 2015.

“It is good to see the residential market being so active while also remaining well-balanced in terms of supply,” said Deck. “The market was equally hot prior to the recession, but at the end of 2006 there were more than 2,500 complete but unoccupied houses on the market and now there are fewer than 300. We hope that this balance is sustainable moving forward.”

“As Northwest Arkansas has continued to experience strong growth, we at Arvest have had the opportunity to help thousands of customers get into homes,” said Craig Shy, executive vice president and loan manager for Arvest Bank in Fayetteville. “During the next several years, expectations are that interest rates will rise slightly, but we keep reminding customers that even if rates increase slightly, they will still be very, very low from a historical perspective. The best news is that, in a balanced market like this, it is generally good for both buyers and sellers, as is evidenced by the large number of both new and existing homes that sold during the last half of 2016.”

The total number of new and existing homes sold in the last half of 2016 was 4,772 – a 12.1 percent increase from the 4,257 sold in the last half of 2015.

The Arvest Skyline Report is a biannual analysis of the latest commercial, single-family residential and multi-family residential property markets in Benton and Washington counties. The report is sponsored by Arvest Bank and conducted by the Center for Business and Economic Research (CBER) in the Sam. M. Walton College of Business at the University of Arkansas.

In 2004, Arvest Bank entered into a contract with CBER to collect information about the local real estate markets. CBER researchers aggregated and analyzed data from local governments, property managers, visual inspections and the business media to provide a complete picture of the status of property markets in the two counties.

The CBER provides excellence in applied economic and business research to federal, state and local government, as well as to businesses currently operating or those that desire to operate in the state of Arkansas. The center further works to improve the economic opportunities of all Arkansans by conducting policy research in the public interest.

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Arvest Bank is proud to partner with nearly 70 organizations, including the Ledbetter Ambassadors, in the bank’s sixth annual 1 Million Meals initiative to raise one million meals for the food insecure in the 120+ communities the bank serves.

WHO: Ledbetter Ambassadors

WHERE: Serves the Farmington, Ark., area

WHAT: The Ledbetter Ambassadors was established in 2009. There is one representative from each classroom that serves the school in whatever capacity is needed: handling snack packs (putting them together and delivering to the teachers to give to their students), managing food and clothing drives, managing fundraisers, the face of the school for adult guests or new students, and daily duties for the office.

WHEN: Arvest Bank is accepting donations of both food and funds April 4 – May 28, 2016. Donations will be distributed to local food partners.

WHY: Ledbetter Ambassadors are chosen based on character, responsibility or a way to encourage that child. They get to participate in service learning while helping the school carry out responsibilities. It is also a way for kids to be helping other kids.

HOW: You can make a donation through any of the following methods:

Donate via Phone – Customers can make a $1 (or more) donation by calling (866) 952-9523. Funds will be drawn directly from the customer’s Arvest account.

Donate via Mail – Mail a check to Arvest Bank Operations, ATTN: 1MM, P.O. Box 799, Lowell, AR 72745. Include 1 Million Meals in the memo line of the check.

Donate in a Branch – Stop by your local Arvest Bank branch to donate nonperishable food items or make a monetary donation of cash or check.

Investment products and services are provided by Arvest Investments, Inc., doing business as Arvest Asset Management, member FINRA/SIPC, an SEC registered investment adviser and a subsidiary of Arvest Bank. Trust services are provided by Arvest Bank. Insurance products are made available through Arvest Insurance, Inc., which is registered as an insurance agency. Insurance products are marketed through Arvest Insurance, Inc., but are underwritten by insurance companies.
Securities and Insurance Products: Not Insured by FDIC or any Federal Government Agency, May Lose Value, Not a Deposit of or Guaranteed by a Bank or any Bank Affiliate.